 Refinancing
a mortgage after bankruptcy
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 Dear
Dr. Don,
We are one year into a Chapter 13 bankruptcy and have excellent
income. Will any mortgage companies give us a first mortgage? I
know we would have to ask permission from the trustee. We have gotten
solicitations from companies who only want to do refinance.
-- Beth Bounce-Back
 Dear
Beth,
Refinancing a first mortgage gives you a new first mortgage, so
all those refinance offers may be right up your alley. A first mortgage
is a secured loan, backed by the value of the home, so the lender
isn't taking on as much risk as an unsecured creditor.
You want to be a little more proactive than to wait
for someone to solicit your business. You're a good candidate to
work with a mortgage broker to find your new loan. I'd recommend
using an upfront mortgage broker as described by Jack Guttentag,
professor of finance emeritus at the Wharton School of the University
of Pennsylvania, in the Bankrate column, "Want
your mortgage wholesale? Try an upfront broker." Mortgage
brokers are good for story loans, and you've got a story to tell
in getting your new financing.
Here's what Bankrate's Bankruptcy Adviser, Justin
Harelik, has to say in a recent column
about getting a mortgage after filing for bankruptcy:
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If, a year or two after you declare bankruptcy, you
can get your financial act together, pay your bills on time and
manage to put together a nice big down payment, you can get a decent
mortgage. There are a lot of variables to it, and all lenders have
their own rules, but these days, you don't get shut out of the mortgage
market entirely after bankruptcy, and having a big chunk of change
can whittle down your rate. The more time there is between you and
the bankruptcy, and the bigger the bankroll you bring to the table,
the closer to "normal" rates you'll get.
Congratulations on sticking with your Chapter 13 repayment
plan. The majority of people filing for Chapter 13 aren't able to
complete the plan. If you're not able to refinance now, it shouldn't
be too far off.
To ask a question of Dr. Don, go
to the "Ask the Experts"
page, and select one of these topics: "financing a home,"
"saving & investing" or "money."
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